27789.pdf

Office of the Secretary
Service Date
November 6, 1998
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF
CITIZENS TELECOMMUNICATIONS
COMPANY OF IDAHO TO REDUCE ACCESS
RATES AND REBALANCE OTHER RATES FOR
TELECOMMUNICATIONS SERVICES.
CASE NO. CTC-98-
ORDER NO. 27789
On May 15 , 1998, Citizens Telecommunications of Idaho filed a plan to rebalance its
rates for telecommunications services in Idaho to lower access rates by removing inherent subsidies
in those rates and to address the numerous petitions and requests for extended area service (EAS)
from customers in communities throughout the Citizens serving area. Citizens filed tariffs that
would reduce its access rates to the statewide average, simplify its toll rates and increase its local
service rates to adjust for the loss in access revenues. Additionally, Citizens expanded basic local
service areas and added optional local and regional calling plans. According to Citizens, the filing
is revenue neutral to the company. Citizens requested that this Application be processed under
Modified Procedure.
The Commission issued a Notice of Application on June 5, 1998. Permission to
intervene was requested by and granted to U S WEST, MCI, AT&T, and the Idaho Telephone
Association (ITA). On June 18, 1998, the Commission issued Order No. 27578 to establish Case
No. CTC-98-3 to process this Application and consolidated three pending EAS dockets to be
decided in this case: GNR- T -96-2 (Horseshoe Bend/Garden Valley/Sweet); GNR- T -96-8 (Riggins/
White BirdlNew Meadows); and GNR-97-l0 (Blaine County). In addition to the parties listed
above who were granted intervention, Cambridge Telephone Company was identified as a party in
GNR-96-2 and GNR-96-
The Commission also postponed implementing the Aberdeen local calling plans that had
previously been approved in GNR- T -96- 7, pending the outcome of this case. The Commission
determined that Citizens ' Application would be processed by Modified Procedure with comments
to be filed by all parties within 21 days. On July 8, 1998, the Commission extended the comment
period to July 31 in order to provide parties more time to gather information regarding the costs
pertinent to Citizens' Application. Order No. 27619. Hearings were held in Wilder on July 2, 1998
ORDER NO. 27789
and in McCall on August 4, 1998 , to receive evidence of community of interest between petitioning
customers and the requested calling areas.
U S WEST, MCI, AT&T, ITA and Staff filed comments. On September 22, 1998
U S WEST, ITA and Citizens filed a Stipulation withdrawing certain Citizens' optional plans in
order to resolve US WEST's and ITA's concerns. On October 6, 1998, Citizens filed a response
to concerns raised by Cambridge Telephone Company and Council Telephone Company,
incorporating a Letter of Agreement between Citizens and Cambridge/Council.
Based on its review of the record, the public hearings, public comments, company
comments, the law, and the stipulations filed by Citizens, U S WEST, ITA, and Staff, the
Commission approves Citizens' proposal to rebalance its rates and approves all Citizens ' proposed
EAS changes and its local calling plans, as modified by this Order. The Commission further finds
that this decision resolves all the pending petitions for EAS in GNR- T -96-2 (Horseshoe
Bend/Garden Valley/Sweet), GNR-96-8 (RigginslWhite BirdlNew Meadows), GNR-97-
(Springfield), USW-97-lICTC-97-l (Marsing) and GNR-97-l0 (Blaine County).
BACKGROUND
Access charges are the fees long-distance (toll) carriers pay local exchange companies
(LECs such as Citizens) for the use ofthe LECs' local network facilities when customers make toll
calls. Toll carriers pay originating access charges to the LEC where the toll call is originated and
terminating access charges to the LEC where the toll call is terminated. For many ofIdaho s LECs
revenues derived from access charges represent a significant portion of their authorized revenue
requirement and clearly subsidize, in part, basic local exchange service. Conversely, the access
charges paid by toll carriers represent a predominant portion of the cost of providing a toll call.
Lowering Citizens' access charges (with all other factors unchanged) wi11lower costs to the various
long-distance carriers and, presumably, lower their rates for in-state, long-distance services.
In 1997, the Legislature enacted several amendments to the Idaho Telecommunications
Act codified at Idaho Code 99 62-601 et seq. The Legislature directed the Commission to identify,
quantify, and remove implicit subsidies existing in the rates of incumbent LECs. Idaho Code 9 62-
623(1) and (2). In particular, the Legislature determined that access charges
, "
including all of the
carrier common line charge" subsidize local service rates. Id. The carrier common line charge is
ORDER NO. 27789
a component of the per-minute access charge and is intended to cover a LEC's fixed costs of
providing local exchange access.
THE APPLICATION
A. Access Charges.
In response to state and federal legislative changes requiring local exchange carriers to
reduce or eliminate existing implicit rate subsidies, Citizens proposed to reduce its current effective
access charges by more than fifty percent (50%), ITom an effective rate of about twelve cents ($0.12)
per minute to a proposed effective rate of about six cents ($0.06) per minute. Citizens stated that its
proposed effective access rates are approximately equivalent to the statewide average and in line
with Citizens' interstate access rates. Citizens stated that it expects long-distance carriers will reduce
the rates they charge customers in Citizens' territory to reflect Citizens ' reduction of access charges.
The "savings" that individual customers may receive is dependent upon their long-distance usage
and whether their long-distance carriers "pass through" the rate reductions. Pursuant to Idaho Code
9 62-604, the Commission does not regulate long-distance rates for the carriers who pay access
charges to Citizens.
B. Local Rate Rebalancing.
To offset the lower revenues caused by the reduction in access charges, Citizens proposed
a local rate increase from $9.85 to $17.50 per month for residential lines and from $19.75 to $35. 10
per month for business lines. Current EAS increments, which average $2.08 for residential lines and
$5.50 for business lines, wi11 be eliminated.
Expanded local calling areas within Citizens' serving area wi11 be included in the basic
local rates and optional local calling plans wi11 be available for $1.20 for residential lines and $1.
for business lines. In addition, optional regional local calling plans to areas outside Citizens ' serving
area will be offered for $8.10 for residential customers and $12.15 for business customers. Citizens
proposed local rates are lower than 125% of statewide average.
Citizens did not request an adjustment to its revenue requirement and claimed that the
proposed rate design is revenue neutral providing Citizens with the opportunity to earn its already
established revenue requirement. This is the first rate increase for residential and business basic
exchange service in 13 years for Citizens' customers. In part , Citizens justified its rebalancing
ORDER NO. 27789
request by claiming that customers will benefit from the proposed rate design because it includes
significantly expanded local calling areas in many exchanges and offers customers optional local
calling plans that if subscribed to provide significant savings over existing toll rates.
According to Citizens, the rate design wi11 not require Citizens to draw any revenue from
the state Universal Service Fund
EAS and Optional Calling Plans
Citizens proposed that existing EAS plans be retained and rates for EAS included in the
basic service rates, making existing mandatory flat rate EAS uniform for Citizens' exchanges that
are located near each other. Optional local and regional calling plans would offer several payment
options: Premium Flat Rate Options that give toll-free calling to specified exchanges; Measured
Service Options with lower fixed montWy rates plus a discounted per-minute usage rate; Basic
Exchange Rate Option/Long Distance Toll Service permitting the customer to pay only the montWy
basic rate with long distance calls charged the normal toll rate.
More specifically, residential customers choosing one of the proposed optional regional
calling plans would be offered a flat rate of $8.l0/month or measured rate of $4.05/month plus
5~/minute. Business customers could choose to pay a flat rate of $12. IS/month or measured rate of
$6.20/month plus 5~/minute. Residential customers taking advantage of one of the optional!Q.gjl
calling plans could pay either a flat rate of $1.20/month or a measured rate of $0.60/month plus
5 ~/minute. Business customers would be offered a flat rate of $1. 80/month or a measured rate of
$0.90/month plus 5~/minute. According to Citizens, rates for these calling plans were developed
using the same methodology approved by the Commission in the Homedale-Parma-Wilder and
Aberdeen cases. Application at 12. Citizens' original Application proposed more than one optional
regional calling plan for some of their exchanges.
Citizens stated it can implement these services within 120 days of an order, with optional
calling plans phased in during an additional period of 90 days.
THE COMMENTS
A. Commission Staff
Staff generally supported Citizens' Application and urged the Commission to approve
it. Staff noted that Congress required states, as a part of the federal Telecommunications Act of
ORDER NO. 27789
1996, to identify and reduce subsidies that were implicit in local exchange rates. Likewise, the Idaho
Legislature directed the Commission to "d)etermine a mechanism for removal of the subsidies from
the rates of incumbent telephone corporations.Idaho Code 9 62-623. The Legislature specifically
identified access charges as one of those implicit subsidies. Staff agreed that Citizens' proposed
rebalancing would bring its access charges closer to their embedded costs. Staff Comments at 6.
Staff further confirmed that the proposed rate increases, although large, were necessitated by the
reduction in access charges and that the overall proposal would be revenue neutral. Staff Comments
at 21. Additionally, Staff found that revenue from the proposed flat and measured charges and usage
will offset the additional expenses and lost revenue incurred to implement the proposed optional
local and regional calling plans. Id. Therefore, Staff recommended approval of the proposed
reductions in access charges and the concomitant increases in rates.
Staff also recommended approval of Citizens' EAS proposals and its optional calling
plans. Staff Comments at 23-25. Staff reviewed the outstanding Petitions for EAS from Citizens
customers, as well as, those calling plans that would be offered as options by Citizens to its
customers in some communities and determined that all were justified based on the criteria this
Commission previously approved for evaluating petitions for EAS. Staff noted that Citizens' plans
do not grant all customer requests for EAS or propose even optional calling plans in some cases.
However, Staff supported Citizens' proposals.
1. GNR-96-
--
Garden Valley, Horseshoe Bend, Sweet Petition for EAS. Staff
supported expansion of the Garden Valley, Horseshoe Bend and Sweet local calling areas to allow
each exchange to call the other toll free. Staff found that the calling patterns and the community of
interest supported EAS among these communities. Staff Comments at 10. Staff also found that
providing an optional local calling plan for Garden Valley, Horseshoe Bend and Sweet customers
to call Lowman and an optional regional calling plan to the Boise, Caldwell, Emmett, Idaho City,
KUlla, Melba, Meridian, Middleton, Nampa, and Star exchanges was appropriate. Staff Comments
at 11. Approval of these plans would resolve all of the Petitioners' requests except for those
Petitioners who wanted toll-free calling to McCall and Cascade.
2. GNR-96-
--
Aberdeen Petition for EAS into American Falls/Blackfoot.
Aberdeen citizens began petitioning for EAS to American Falls and Blackfoot in 1994. On
September 24, 1997, Citizens filed a tariff advice to establish optional local service between
Aberdeen and American Falls and Aberdeen and Blackfoot (Case No. CTC-97-4) and filed a
ORDER NO. 27789
second tariff advice that would establish optional local calling between Aberdeen and Pocatello
(Case No. CTC-97-5). The Commission consolidated these cases and approved Citizens' tariffs
in Order No. 27412. The plans were to have been implemented on July 13 , 1998. On June 19, 1998
the Commission granted Citizens ' request to delay implementing these calling plans pending the
Commission s decision on this Application. Order No. 27578.
Citizens does not propose to change the Aberdeen/Springfield local calling area but
proposes to provide an additional optional regional calling plan that wi11 provide customers the
option of subscribing to a plan to call American Falls, Bancroft, Blackfoot, Downey, Grace, Idaho
Falls, Lava Hot Springs, McCammon, Montpelier, Pocatello, Preston, Rexburg, Rigby, Ririe
Roberts, Shelley, and Soda Springs exchanges. Staff recommended approving Citizens ' plan.
3. GNR-96-
--
New Meadows, Riggins, White Bird Petitions for EAS into
Grangeville. New Meadows, Riggins, Grangevi11e and White Bird customers petitioned the
Commission to approve EAS between the telephone exchanges in New Meadows, Riggins
Grangeville, White Bird, McCall and Council.
Staff noted that White Bird and Riggins customers have long wanted toll free calling to
Grangeville. However, the Commission conducted a thorough investigation into this possibility in
1992 and found that EAS to Grangevi11e was not feasible. Order No. 25857. The Commission
found that the combination of LATA boundaries and difficult terrain makes EAS to Grangeville very
costly. Id. Moreover, Riggins and White Bird customers indicated that they would be unwi11ing
pay large montWy charges (approximately $35/month) for this option. Staff found that conditions
have not changed significantly since then and noted that White Bird residents recently submitted
another petition that acknowledges local service to Grangevi11e is not feasible. Those Petitioners
now request local calling to Riggins as an alternative to Grangeville. Therefore, Staff supported
Citizens' decision to not offer either EAS or an optional calling plan to Riggins and White Bird
customers for calling into Grangevi11e. Staff Comments at 23.
Staff supported Citizens' proposal to expand Riggins , White Bird and New Meadows
local calling areas to include Riggins, White Bird, McCall and New Meadows exchanges and its
proposal to expand Cascade and Donnelly local calling areas to include New Meadows. Cascade
and Donnelly already have local calling to Cascade, Donnelly and McCall. In every case, Staff found
that calling patterns and the community of interest supported EAS. Finally, Staff supported
expanding McCall's local calling area to include Riggins, White Bird, Cascade, Donnelly and New
ORDER NO. 27789
Meadows. Cascade, Donnelly, McCall, New Meadows, Riggins and White Bird customers would
have the option of adding Council as a local calling plan under Citizens' plan. Staff found that this
would resolve the problem New Meadows customers currently have of being split into two
exchanges with two separate calling areas and, therefore, supported approval of the optional plan.
4. GNR-97-10
--
Carey Petition for BAS into Hailey and Ketchum. Staff found that
approximately seventy-five percent (75%) of the Carey residents work in Hailey or Ketchum and that
there was a community of interest. Staff further found that Citizens' proposal to offer Carey
customers the option of either subscribing to a calling plan into Bliss, BuW, Castleford, Dietrich
Eden-Hazelton, Gooding, Hagerman, Jerome, Kimberly, Murtaugh, Shoshone, Twin Falls, Wendel
Filer, and Hollister exchanges or into Ketchum and Hailey was appropriate.
5. GNR- T-97-21
--
Springfield Petition for EAS into Eastern Idaho. Citizens proposed
to preserve Springfield's current local calling area, which includes Aberdeen and Blackfoot, and to
offer customers an optional calling plan to call American Falls, Bancroft, Blackfoot, Downey, Grace
Idaho Falls, Lava Hot Springs, McCammon, Montpelier, Pocatello, Preston, Rexburg, Rigby, Ririe
Roberts, Shelley, and Soda Springs exchanges. Based on the calling data and the community of
interest, Staff recommended approving Citizens' proposal. This would address the outstanding
requests.
6. USW-97-1/CTC-97-1-- Petition for EAS between Marsing, Nampa and Melba
exchanges and Homedale, Parma, and Wllder exchanges. Marsing and Homedale customers
currently have local calling to each other and to Caldwell. Parma and Wilder customers can call
each other and Wilder customers can also call Homedale. A petition for EAS between Marsing,
Nampa and Melba was filed in January 1997 -- USW-97-lICTC-97-1. Notice of the Petition
was issued February 13 , 1997. The Commission does not have an open case regarding
Homedale/ParmalWilder EAS.
Citizens proposed to expand the Marsing, Parma, Wilder and Homedale local calling
areas to allow those customers to call each other toll-free and proposed to also offer two optional
calling plans to all these customers: optional calling to Boise, Caldwell, Emmett, Idaho City, Kuna
Melba, Meridian, Middleton, Nampa, and Star exchanges and/or optional calling to New Plymouth
and Payette exchanges. Staff fOUlld that both the appropriate community of interest and calling data
ORDER NO. 27789
in each instance supported both the proposed expansions of existing local calling areas and offering
optional calling plans.
7. Citizens' proposal to offer Fairfield customers optional calling plans. There are no
pending petitions for EAS from Fairfield customers. Fairfield is in Camas County and has 401
business and 102 residential lines (total 503). Citizens' Application would offer Fairfield customers
the option of regional calling to Boise, Caldwell, Emmett, Idaho City, Kuna, Melba, Meridian
Middleton, Nampa, and Star exchanges and/or to Hailey and Ketchum exchanges. Staff supported
Citizens' Application.
8. Citizens ' proposal to offer Elk City customers an optional calling plan into the
Grangeville and Kooskia exchanges. Citizens did not propose to expand Elk City s local calling
area or to provide an optional regional local calling plan. It did, however, propose to offer an
optional local calling plan that would give Elk City residents calling to Grangeville and Kooskia.
These are U S WEST - North exchanges. In 1992, Elk City customers previously requested calling
to Grangeville, the nearest community, so they could call the hospital, the nursing home, doctors
dentists, the veterinarian, banks, churches, employment offices, the county seat, schools and
providers of necessary goods and services. In Order No. 24859, Case No. GNR-92-, the
Commission denied this Petition based on the low volume of calls the customers made to
Grangevi11e. There are no other pending petitions from Elk City customers. Staff recommended
approval of this optional plan.
B. AT&T Comments
AT&T supported Citizens' Application , noting that the Idaho Legislature specifically
instructed the Commission to remove implicit subsidies from rates, including access charges. AT&T
Comments at 2-4. AT&T argues that Citizens' current access rates are excessive on their face
approximately twice the level of the Idaho statewide average and among the highest in the nation.
Id. Moreover, AT&T pointed out that Citizens' access rates generated nearly half of its total
intrastate revenue and, therefore
, "
unquestionably, Citizens' local service is greatly subsidized by
access services.Id. It also noted that Citizens' proposed rates for local service are in line with rates
paid by customers statewide and the present rates have not been raised in over 12 years. AT&T
ORDER NO. 27789
Comments at 5. Finally, AT&T stated it had reduced its night/weekend rate for basic schedule
customers in Idaho in response to Citizens' initial access rate reduction and further stated:
If access charges are reduced as proposed in the Application
AT&T wi11 continue to share the reductions with customers.
AT&T Comments at 6.
MCI Comments
MCI generally supported the proposed reduction in access rates and suggested this was
only a first step. MCI Comments at 1-2. Like AT&T, MCI pointed out that the Idaho Legislature
specifically instructed the Commission to remove implicit subsidies from rates, including access
charges. MCI Comments at 2. MCI also suggested such reductions should not be "revenue neutral."
Id.
D. IT A Comments
ITA generally supported the Application. ITA Comments at 1. However, it expressed
serious reservations about some of the proposed optional local calling plans between Citizens
exchanges and some of the independent telephone company exchanges. Id. It had three concerns:
the proposals for optional plans are one-way and ITA members support two-way EAS; compensation
for the affected IT A member companies is not addressed in the Application; and the schedule for
implementation must be coordinated. Id.
E. U S WEST Comments
U S WEST supported Citizens' proposal to rebalance its rates and reduce access charges.
U S WEST Comments at 2. U S WEST also supported expanding its own EAS "regions" to include
adjacent Citizens exchanges if the Commission determines there are appropriate communities of
interest. Id. It contended, however, that any expansion ofEAS should include the entire US WEST
EAS region rather than specific exchanges, as Citizens proposed, and "therefore supports the general
approach that Citizens is taking in providing access to US WEST regions as an option for customers
in some of its exchanges.Id. U S WEST also made clear its position that whenever this
Commission approved an optional calling plan for Citizens' customers to call toll-free into a
U S WEST exchange, U S WEST planned to impose mandatory EAS on U S WEST customers. Id.
U S WEST also recommended that an additional stipulation with Staff should be
negotiated to address U S WEST costs to implement the proposed optional calling plans into its
regions. While U S WEST stated that the Commission had already approved the general method for
ORDER NO. 27789
determining those costs in Order No. 27633 , Case No. USW-98-, both Staff and US WEST had
always recognized that the number of minutes to be converted to non-toll under an optional calling
plan could not be assumed to be all the existing toll minutes. Moreover, U S WEST also recognized
that in areas having " 1 +" dialing, dial around minutes would be less than those calculated in Case
No. USW-98-3. Therefore, it recommended that Staff and U S WEST enter into negotiations for
a stipulation.
U S WEST expressed a great deal of concern about some of Citizens' proposed "EAS"l
plans. The majority of its concerns arise from its position that if the Commission approves an
independent telephone company request to offer its customers an optional calling plan into one of
US WEST's exchanges or into one ofU S WEST's EAS regions, US WEST wi11 automatically
extend mandatory EAS into the independent company s exchange for U S WEST customers.
1. Carey Exchange. US WEST opposed Citizens' plan to offer Carey customers the
choice of two optional calling plans: one into Bliss, BuW, Castleford, Dietrich, Eden-Hazelton
Gooding, Hagerman, Jerome, Kimberly, Murtaugh, Shoshone, Twin Falls, Wendel, Filer, and
Hollister exchanges and/or another into Hailey and Ketchum exchanges. U S WEST Comments at
6. US WEST stated it did not intend to include its Hailey, Ketchum, and Sun Valley exchanges
in its Twin Falls EAS Region. However, if Citizens' were allowed to offer both Citizens ' Region
2 and Citizens' Region 4 to Citizens ' Carey customers , U S WEST would be forced to include its
Hailey, Ketchum, and Sun Valley exchanges in its Twin Falls EAS Region or face "arbitrage" or
bridging."2 See Idaho Local Exchange Companies v. Upper Valley Communications, Inc.Case
No. GNR-94-, Order No. 25885. US WEST claimed that given the considerable toll volume
between Hailey, Ketchum, and Sun Valley exchanges and the US WEST Twin Falls EAS Region
converting to non-toll would require spreading a relatively large amount of EAS related costs to its
1 While U S WEST labels Citizens' plans as EAS, those plans are not mandatory EAS. Citizens proposes
optional calling plans.
2 For example, in the Upper Valley case, an Upper Valley customer in Boise who wanted to call Nampa
dialed an Upper Valley number in Meridian. Dialing the local Meridian number connected the customer to Upper
Valley s computer system. After connecting to the system, the customer was asked to enter a personal identification
number (PIN). Once the computer verified the PIN, customers then dialed the seven-digit local number in the Nampa
exchange they wished to reach. The computer then released the outgoing call through the U S WEST provided Centron
lines connected to the local network. When the Nampa number was reached, Upper Valley s computer "dropped off
leaving the Boise caller connected to the N amp a party without paying access to U S WEST or toll. Upper Valley at 3.
ORDER NO. 27789 10-
customer base. Moreover, it stated that it was not aware of any requests from its customers for EAS
into the Twin Falls EAS Region. U S WEST Comments at 5-6. U S WEST, therefore
recommended that Citizens' withdraw its optional calling plan to the US WEST Twin Falls EAS
Region and only offer Citizens' Region 4 to its Carey customers. Id.
2. Fairfield Exchange. Similarly, U S WEST raised the same arguments with regard
to Fairfield. US WEST recommended that Citizens' withdraw its optional calling plan to the Hailey
and Ketchum exchanges and only offer optional calling to the Bliss, BuW, Castleford, Dietrich
Eden-Hazelton, Gooding, Hagerman, Jerome, Kimberly, Murtaugh, Shoshone, Twin Falls, Wendel
Filer, and Hollister exchanges to Citizens ' Fairfield customers. Id.
3. New Plymouth and Payette Exchanges. Citizens' plan would offer its Wilder , Parma
Marsing, and Homedale customers two optional plans: optional calling into Boise, Caldwell
Emmett, Idaho City, Kuna, Melba, Meridian, Middleton, Nampa, and Star exchanges and/or optional
calling into New Plymouth and Payette exchanges. Because the Commission is considering petitions
from U S WEST customers for EAS from Mountain Home and Glenns Ferry (USW-97-6) and
U S WEST customers in Payette, New Plymouth and Weiser (USW-96-6) into the US WEST
Treasure Valley Region, U S WEST recommended that the Commission decide these pending cases
before it rules on Citizens' Application and add those exchanges into the optional plans offered by
Citizens to its Wilder, Parma, Marsing, and Homedale customers. US WEST Comments at 6-
4. Elk City Exchange Optional Calling to Grangeville and Kooskia. U S WEST
recommended that the Commission limit Citizens' plan to offer optional calling for Elk City
customers to Grangeville only. U S WEST Comments at 7. U S WEST points out that there are no
pending Elk City customer petitions to have toll free calling to either Grangevi11e or Kooskia.
U S WEST is concerned that optional calling to Kooskia would encourage U S WEST customers
to request EAS. Id.
STIPULATIONS
A. U S WEST, Citizens and IT A Stipulation
On September 22, 1998, Citizens, U S WEST and ITA submitted a Stipulation designed
to resolve all their individual concerns. In particular, the parties agreed as follows:
ORDER NO. 27789 11-
1. Citizens agreed to withdraw Citizens Region 53 as a regional calling plan option
for its Homedale, Parma, Marsing and Wilder customers and not seek further
Commission action on its Region 5 proposal until Case No. USW-96-6 is
decided.
2. Citizens agreed to withdraw Citizens Region 44 as an option for its Fairfield
customers. The parties agreed that Citizens Region 25 will remain an optional
calling plan for Fairfield customers. Fairfield customers would continue to have
access to Hailey and Ketchum/Sun Valley US WEST exchanges on a toll basis
only.
3. Citizens agreed to withdraw Citizens Region 2 as an optional calling plan for its
Carey customers. Citizens Region 4 would still be offered as a toll free calling
plan to Hailey, Ketchum/Sun Valley U S WEST exchanges. Carey customers
would continue to have access to the U S WEST exchanges in the U S WEST
Twin Falls Region on a toll basis only.
4. Citizens agreed to modify the optional local calling plan for its Elk City
customers and withdraw Kooskia as part of the optional local calling plan.
Grangevi11e would remain a local calling plan option for Elk City customers but
Elk City customers would continue to have access to the Kooskia exchange on
a toll basis only.
5. The parties further agreed that the economic impact of Citizens s proposal on
Cambridge Telephone Company, Council Telephone Company, and possibly
other independent companies, could not be determined until the Commission
specifies the affected routes and the parties conclude revised interconnection
agreements. The parties agreed the stipulation would not prejudice the rights of
any ITA member company to seek ratemaking compensation for any revenue loss
that may occur as the result of implementation of Citizens s proposal.
Settlement and Stipulation of U S WEST Communications, Inc., Citizens Telecommunications
Company ofIdaho and Idaho Telephone Association, at 4-5. US WEST, ITA and Citizens stated
this Stipulation resolves all issues among them and represents a reasonable resolution of the disputed
issues.
3 New Plymouth and Payette exchanges.
4 Hailey and Ketchum exchanges.
5 Bliss, Buhl, Castleford, Dietrich, Eden-Hazelton, Gooding, Hagerman, Jerome, Kimberly, Murtaugh,
Shoshone, Twin Falls, Wendel, Filer, and Hollister exchanges.
ORDER NO. 27789 12-
B. U S WEST and Staff Stipulation Regarding U S WEST Costs
for Optional Calling Plans into U S WEST Exchanges
On July 17, 1998, the Commission issued an Order in Case No. USW - T -98-3 approving
a settlement between U S WEST and Staff adopting a general methodology for determining
US WEST's costs for providing EAS in future cases. Order No. 27633. At the hearing to consider
approval of that Stipulation, both the Staff witness and U S WEST witness testified that the
stipulated methodology would form the basis for determining U S WEST's costs in this case.
However, both also testified that because Citizens was proposing several optional plans, the method
would be modified to accommodate those optional plans and to accommodate the reduced dial
around caused by Citizens use of "1+" dialing.
A settlement conference was held with all parties on September 10, 1998, pursuant to
Procedural Rule 272. On September 24, 1998, U S WEST and Staff filed a Stipulation and
Settlement reflecting the costs for accommodating Citizens' optional calling plans into US WEST
exchanges. More specifically, the parties stipulated in relevant parts as follows:
1. U S WEST and the Staff agreed that U S WEST's costs for accommodating the
proposed optional calling plans from Citizens' exchanges to the U S WEST
exchanges as proposed in this case, CTC- T -98-, are $0.0818 per toll minute of
use adjusted to reflect dial around at an agreed rate of five percent (5%), (i., toll
minutes of use x 1.05 x $0.0818).
2. U S WEST and the Staff agreed that in determining the number of toll minutes
of use to be used in the formula described in paragraph 1 of this Stipulation, the
total actual toll minutes wi11 be reduced by twenty percent (20%) on all optional
calling plan routes to reflect the fact that it is expected that some customers will
not subscribe to Citizens' optional calling plans. If the Commission does not
approve all the optional plans proposed by Citizens, these costs wi11 be re-
calculated to reflect the lower number of toll minutes of use.
3. U S WEST and Staff agreed that the Stipulation did not affect previous
Commission decisions ordering that US WEST's reasonable and prudent capital
investments for network facilities or improvements specifically needed to provide
EAS or to accommodate the optional calling plans, as established by competent
evidence, be recovered from remaining Revenue Sharing Funds.
4. U S WEST and Staff agreed that this Stipulation does not affect the Stipulation
approved by the Commission in Case No. USW- T -98-, Order No. 27633 , and
that U S WEST's costs for providing mandatory EAS from U S WEST
exchanges to Citizens' exchanges wi11 be calculated as set forth in that
ORDER NO. 27789 13-
Stipulation. U S WEST and Staff further agreed that if the Commission approves
both the optional calling plans proposed by Citizens, as modified by the
Stipulation among Citizens, U S WEST and the Idaho Telephone Association
companies, and mandatory EAS from U S WEST exchanges to Citizens
exchanges, then, using the Stipulation approved by the Commission in Case No.
USW-98-, Order No. 27633, U S WEST's costs for implementing all plans
would be calculated as approximately $1 356 650. If the Commission does not
approve all the optional plans proposed by Citizens, these costs wi11 be re-
calculated to reflect the lower number of toll minutes of use.
6. U S WEST and Staff agreed that the number of toll minutes of use may be
adjusted after one year of experience to reflect actual conversion levels, thereby
adjusting the calculation ofU S WEST's costs for accommodating the Citizens
optional plans.
Stipulation and Settlement ofU S WEST Communications, Inc. and Commission Staff, at 2-
Citizens Response to ITA's Comments and Letter of Agreement
On October 6, 1998, Citizens filed a response to ITA's comments and included the Letter
of Agreement it reached with Council Telephone Company Exchange and Cambridge Telephone
Company on September 24, 1998. Citizens stated that the issues raised by IT A on behalf of Council
and Cambridge had been resolved. More specifically, Citizens stated it would be offering the
following optional toll free local calling plans to its customers into both Council's and Cambridge
exchanges as follows:
Citizens' Exchanges
Cascade
Donnelly
McCall
New Meadows
White Bird
Council Exchange
Council
Council
Council
Council
Council
Citizens' Exchanges
Garden Valley
Horseshoe Bend
Sweet
Cambridge Exchanges
Lowman
Lowman
Lowman
Cambridge and Council agreed to develop a local calling plan that wi11 allow their
Lowman and Council exchange customers to call the Citizens exchanges, resulting in a two way
local calling plan for Cambridge and Council customers. They further agreed to coordinate the
implementation of the calling plans. They also agreed that they wi11 use a "bill-and-keep" method
ORDER NO. 27789 14-
for compensating each other for the interchange of traffic caused by implementing the local calling
plans.
PUBLIC TESTIMONY
On July 2, 1998, the public hearing in Wilder was attended by fewer than thirty persons
of which seven (7) individuals testified. Only one person testified against the proposal. The Mayor
of Wilder testified in favor of the plan. Tr. at 13-14. Most testified that they had significant long
distance charges associated with calls to the Boise area and would benefit from the optional plans.
More than thirty persons from Wilder and Homedale sent in written comments and nearly all were
in favor of the plans. The Commission takes official notice of an earlier hearing held in Wilder in
conjunction with Case Nos. CTC-97-, GNR-93-7 and GNR-93-11 in which Wilder and
Homedale residents testified in favor of some sort ofEAS or optional calling plans to the Treasure
Valley.
On Apri129, 1997, the Commission convened a public hearing in these cases
in Wilder, Idaho. Numerous customers appeared and expressed their desire
for EAS calling to the Caldwell and Nampa exchanges as soon as possible.
Order No. 27063 at 2.
On August 4, 1998, a second public hearing was held in McCall and it was attended by
approximately forty persons of which seven (7) individuals testified. Only one person, Garth
Baldwin, testified in favor of the Application and filed petitions with over two hundred (200)
signatures supporting the Citizens' plan for rate rebalancing and for optional calling from Horseshoe
Bend, Garden Valley and Sweet into Boise. Tr. at 64-69. In addition, Mr. Baldwin asked whether
the Commission would grant two way toll free calling from Boise into Horseshoe Bend, Garden
Valley and Sweet. Tr. at 65. Aloa Stevens on behalf of Citizens stated that this was Citizens' plan.
Tr. at 65.
The other witnesses were strongly opposed to the plans. These individuals were from
Riggins and the McCall area and were most concerned about the rate rebalancing. Moreover, these
individuals noted the Riggins and McCall residents were not offered optional calling to the Boise
area. The Commission also received a significant number of letters opposing the plans to rebalance
the rates from the Riggins Chamber of Commerce, Salmon River Chamber of Commerce, various
Riggins and White Bird local government agencies, as well as, individual Riggins, McCall and
ORDER NO. 27789 15-
White Bird residents. The vast majority of these correspondents opposed the rate increases resulting
from the rebalancing plans.
COMMISSION FINDINGS
After reVIeWIng the Application, written comments and public testimony, the
Commission finds that Citizens' Application should be approved as modified below.The
Commission further finds that this decision resolves the pending petitions for toll free calling in
GNR-96-2 (Horseshoe Bend/Garden Valley/Sweet), GNR-96-8 (RigginslWhite BirdlNew
Meadows), GNR-97-l0 (Blaine County), and USW-97-lICTC-97-l (Marsing).
A. Citizens ' Rate Rebalancing and Access Rate Reductions
As the telephone carriers and Commission Staff noted Idaho Code 9 62-623 requires that
implicit subsidies be removed from the rates of incumbent telephone corporations such as Citizens.
More specifically, the Legislature has identified the carrier common line component of access
charges as an implicit subsidy that must be reduced and/or made explicit. Reducing Citizens' access
charges represents a decrease of more than 50% from the Citizens' composite access charge rate.
As Citizens and the Staff noted, long-distance carriers have suggested that they will pass
on the "savings" to customers. Indeed, AT&T stated in its Comments that it wi11 "share" the
reduction with its customers. The Commission has no authority to establish the rates for long-
distance carriers; the most the Commission can do is hope that the toll carriers will pass through the
rate reductions to their customers. AT&T stated it has already begun to pass on those savings.
determine whether toll carriers pass through the access charge reductions, the Commission directs
that the commenters in this case, AT&T and MCI, advise the Commission no later than December 1
1998, of the actual amount of access charge reductions that they implemented by lowering long-
distance rates.
Because access rates have, in essence, subsidized local service rates and because Citizens
is a fully rate regulated company, it is entitled to have the opportunity to meet its revenue
requirement. The Commission, therefore, concludes that rebalancing Citizens' local service rates
is necessary in order to allow Citizens to have the opportunity to earn its rate of return. The
Commission further finds that the proposed local service rates are fair and just and are revenue
neutral. The rebalanced rates wi11 allow Citizens to recover its authorized revenue requirement.
ORDER NO. 27789 16-
Although the Commission recognizes that most residential customers wi11 receive rate increases, the
Commission finds these increases are required by the amendments to the Idaho Telecommunications
Act. Idaho Code 9 62-623. The Commission further finds that recent changes to the ITSAP can
mitigate these residential rate increases for eligible low-income customers. ITSAP now provides
a monthly credit for eligible residential customers of $10.50. The Commission encourages those
customers who may be eligible for this montWy credit to take advantage of the program.
B. Citizens ' Proposal to Enlarge Existing Local Calling Areas (EAS)
The Commission finds that Citizens' proposal to enlarge certain local calling areas (EAS)
meets the threshold standards for granting EAS as set out in Order No. 26311. Staff Comments
establish that the minimum calling data and a community of interest for enlarging the existing local
calling areas for each of the communities identified in Citizens' Application exist. The US WEST
Citizens, and ITA Stipulation does not change any of the proposed EAS enlargements. Therefore
the Commission finds that Citizens' proposal to enlarge certain local calling areas (EAS) is
reasonable, fair and in the public interest.
Citizens ' Proposed Optional Calling Plans
The Commission finds that optional calling plans are not the same as mandatory EAS and
that the criteria for approving proposals to offer optional calling plans to customers are different.
The Commission finds that optional calling plans allow customers choices in calling options and
does not force them to participate in mandatory EAS. Moreover, implicit in any optional plan is the
fact that the costs for providing the expanded calling are fully met by the plan and its participants --
the costs are not borne by the other rate payers. Both Citizens and Staff indicated that these optional
plans pay for themselves and are not the reason for the local service rate increases. The Commission
has already found that those rate increases are associated with the rate rebalancing necessitated by
access rate reductions. The Commission finds, therefore, that the proposed rates for subscribing to
the proposed optional local calling plans are fair, reasonable and in the public interest.
Although in the case before the Commission there are sufficient calling data and
community of interest factors to justify consideration of mandatory EAS even in these instances
because the plans are optional, the Commission is not required to balance those considerations
against the costs and rate impacts for providing toll free calling. Only those customers who desire
the option of toll free calling wi11 subscribe. In addition, the Commission finds that these plans
ORDER NO. 27789 17-
generally resolve most of the requests for toll free calling already before the Commission. The
Commission encourages telephone companies to offer optional calling plans to their customers. This
would allow their customers choices and avoid unfairly imposing costs on customers who do not
regularly incur toll charges.
The Commission notes that Citizens, U S WEST, and ITA filed a Stipulation and
Settlement that modifies several of the proposed optional calling plans originally proposed by
Citizens in its Application into certain U S WEST exchanges and into certain ITA member
exchanges. The Commission further notes that the affected IT A members, Cambridge and Council
signed a Letter of Agreement that effectively addresses many of the IT A concerns. In addition
US WEST suggests that wherever the Commission approves a Citizens' optional calling plan into
a U S WEST exchange that U S WEST wi11 implement mandatory EAS for U S WEST customers
into the particular Citizens' exchange. However , U S WEST wrongly assumes that wherever the
Commission approves a Citizens' optional calling plan into a U S WEST exchange that the
Commission is approving mandatory EAS for U S WEST customers. EAS should stand on its own.
Where customers are not requesting EAS and no evidence is presented supporting the basic criteria
for granting EAS, the Commission wi11 not generally approve it.
The Commission begins its examination of the Stipulation and Settlement entered into
by Citizens, U S WEST and ITA by observing that the Commission is not bound by the parties
settlement. However, after reviewing the terms of the settlement, the issues resolved, Staff
Comments, the petitions and the public testimony in general, the Commission finds the settlement
ofthe issues, with a few modifications as discussed below, to be fair and reasonable and in the public
interest. IDAPA31.01.01.276. Based on these general findings, the Commission wi11 address each
Citizens exchange and the proposed optional calling plan more specifically below.
1. Aberdeen and Springfield Exchanges. The Commission finds that Citizens
proposed optional calling plan from the Aberdeen and Springfield exchanges to U S WEST'
American Falls, Bancroft, Blackfoot, Downey, Grace, Idaho Falls, Lava Hot Springs, McCammon
Montpelier, Pocatello, Preston, Rexburg, Rigby, Ririe, Roberts, Shelley and Soda Springs exchanges
is fair, reasonable, and in the public interest, and, therefore, approves it. The Commission further
finds that there is no basis for granting mandatory EAS for US WEST customers into Aberdeen and
Springfield exchanges.
ORDER NO. 27789 18-
2. Carey. The Commission finds that Citizens' proposed optional calling plan from the
Carey exchange to U S WEST's Hailey and Ketchum/Sun Valley exchanges is fair , reasonable, and
in the public interest, and, therefore, approves it. The Commission further finds that the Stipulation
to withdraw Citizens' optional calling plan into U S WEST's Bliss , BuW, Castleford, Dietrich, Eden-
Hazelton, Gooding, Hagerman, Jerome, Kimberly, Murtaugh, Shoshone, Twin Falls, Wendel, Filer
and Hollister exchanges is fair and reasonable and in the public interest. The Commission finds that
Carey customers had not requested EAS or toll free calling into Bliss, BuW, Castleford, Dietrich
Eden-Hazelton, Gooding, Hagerman, Jerome, Kimberly, Murtaugh, Shoshone, Twin Falls, Wendel
Filer, and Hollister exchanges. The Commission further finds that there is no basis for granting
mandatory EAS for U S WEST customers into Carey.
3. Cascade, Donnelly, McCall, New Meadows, Riggins, and White Bird Exchanges.
The Commission finds that Citizens' proposed optional calling plans from the Cascade , Donnelly,
McCall, New Meadows, Riggins, and White Bird exchanges into Council are fair, reasonable, and
in the public interest, and, therefore, approves them. The Commission will not order two way toll
free calling at this time. Pursuant to the Letter of Agreement filed by Citizens, Council indicated
it intended to file its own Application with the Commission requesting approval to implement a
similar calling plan to these exchanges.
4. Elk City. The Commission finds that Citizens' proposed optional calling plan from
the Elk City exchange to U S WEST's Grangeville exchange is fair, reasonable, and in the public
interest, and, therefore, approves it. The Commission further finds that the Stipulation to withdraw
Citizens' optional calling plan into U S WEST's Kooskia exchange is fair and reasonable and in the
public interest. The Commission finds that Elk City customers had not requested toll free calling
into Kooskia. The Commission further finds that there is no basis for granting mandatory EAS for
U S WEST Grangevi11e customers into Elk City.
5. Fairfield. The Commission finds that Citizens' proposed optional calling plan from
the Fairfield exchange to US WEST's Bliss, BuW, Castleford, Dietrich, Eden-Hazelton, Gooding,
Hagerman, Jerome, Kimberly, Murtaugh, Shoshone, Twin Falls, Wendel, Filer, and Hollister
exchanges is fair, reasonable, and in the public interest, and, therefore, approves it. The Commission
further finds that the Stipulation to withdraw Citizens' optional calling plan into U S WEST's Hailey
and Ketchum/Sun Valley exchanges is fair and reasonable and in the public interest.The
ORDER NO. 27789 19-
Commission further finds that Fairfield customers had not requested EAS or toll free calling into
U S WEST's Hailey and Ketchum/Sun Valley exchanges and the calling data did not support toll
free calling. The Commission further finds that there is no basis for granting mandatory EAS for
U S WEST customers into Fairfield.
6. Garden Valley, Horseshoe Bend, and Sweet Exchanges. The Commission finds that
Citizens' proposed optional calling plans from the Garden Valley, Horseshoe Bend, and Sweet
exchanges to Cambridge s Lowman exchange are fair, reasonable, and in the public interest, and
therefore, approves them. The Commission further finds that Citizens' proposed optional calling
plan from the Garden Valley, Horseshoe Bend, and Sweet exchanges into U S WEST's Boise
Caldwell, Emmett, Idaho City, Kuna, Melba, Meridian, Middleton, Nampa, and Star exchanges are
fair and reasonable and in the public interest. The Commission further finds that there are
outstanding Petitions requesting two way toll free calling between Garden Valley, Horseshoe Bend
and Sweet customers and US WEST Treasure Valley Region. The Commission, therefore, finds
that there is a basis for granting mandatory EAS for US WEST customers into the Garden Valley,
Horseshoe Bend, and Sweet exchanges and that it is in the public interest and, therefore, grants it.
The Commission will not order two way toll free calling for Cambridge customers in Lowman at
this time. Pursuant to the Letter of Agreement filed by Citizens, Cambridge indicated it intended
to file its own Application with the Commission requesting approval to implement a similar calling
plan to these exchanges.
7. H omedale, Marsing, Parma, and Wllder Exchanges. The Commission finds that
the agreement to withdraw Citizens' optional calling plans for Homedale , Marsing, Parma, and
Wilder customers into US WEST's New Plymouth and Payette exchanges in the Stipulation is no
longer necessary. The Commission issued Order No. 27774, November 4, 1998, in USW-96-
approving extending EAS for U S WEST customers in the U S WEST Treasure Valley Region to
New Plymouth, Payette and Weiser. Therefore, the Commission finds that optional calling plan
should be offered to the Homedale, Marsing, Parma, and Wilder customers for calling to
U S WEST's Boise, Caldwell, Emmett, Idaho City, Kuna, Melba, Meridian, Middleton, Nampa
Star New Plymouth, Payette and Weiser exchanges is fair, reasonable, and in the public interest
and, therefore, approves them. The Commission further finds that there is no basis for granting
mandatory EAS for US WEST customers into Homedale, Marsing, Parma, and Wilder.
ORDER NO. 27789 20-
D. U S WEST Costs for Accomodating Regional Optional Calling Plans.
U S WEST and Staff filed a Stipulation addressing the method for determining
U S WEST costs for accommodating Citizens' optional calling plans into U S WEST exchanges.
The Commission is not bound by the parties' settlement. However , after reviewing the terms ofthe
settlement, the issues resolved and the Commission s Order in USW-98-, Order No. 27633 , the
Commission finds the settlement of the issues to be fair, reasonable and in the public interest.
IDAPA 31.01.01.276. Therefore, the Commission approves the Stipulation and Settlement.
CITIZENS' EAS AND OPTIONAL CALLING PLANS
ORDERED BY THE COMMISSION
Based on the Commission findings, below is a chart reflecting the local calling areas (EAS),
optional local calling plans, and optional regional calling plans ordered by the Commission. The
Region 1
Citizens' regions are as follows:
Region 2
Region 3
Region 4
Region 5
ORDER NO. 27789
American Falls, Bancroft, Blackfoot, Downey, Grace, Idaho Falls, Lava Hot
Springs, McCammon, Montpelier, Pocatello, Preston, Rexburg, Rigby, Ririe
Roberts, Shelley, and Soda Springs exchanges
Bliss, BuW, Castleford, Dietrich, Eden-Hazelton, Gooding, Hagerman
Jerome, Kimberly, Murtaugh, Shoshone, Twin Falls, Wendel, Filer, and
Hollister exchanges
Boise, Caldwell, Emmett, Idaho City, Kuna, Melba, Meridian, Middleton
Nampa, and Star exchanges
Hailey and Ketchum exchanges
Boise, Caldwell, Emmett, Idaho City, Kuna, Melba, Meridian, Middleton
Nampa, Star, New Plymouth, Weiser and Payette exchanges
21-
ORDER NO. 27789 22-
ORDER
IT IS HEREBY ORDERED that Citizens' Application to reduce its access charges and to
rebalance its local service rates is approved. The Commission directs Citizens to issue notices to
media outlets advising customers of their opportunity to review and/or change their current level of
local service and the availability of IT SAP assistance to eligible low-income customers.
IT IS FURTHER ORDERED that AT&T and MCI file reports no later than January 15
1999, indicating the amounts they have reduced toll rates in response to this and other Orders
reducing access charges in Idaho.
IT IS FURTHER ORDERED that Citizens implement the proposed rates included in its
Application no later than thirty (30) days from the service date of this Order.
IT IS HEREBY ORDERED that the various petitions requesting EAS in Case Nos. GNR- T-
96-2 (Horseshoe Bend/Garden Valley/Sweet), GNR-96-8 (RigginslWhite BirdlNew Meadows),
and GNR-97-1O (Blaine County) and USW-97-lICTC-97-l (Marsing) are hereby resolved
and those cases ordered closed.
IT IS FURTHER ORDERED that the Settlement Stipulation filed by the Commission
Staff and US WEST on September 24, 1998 is hereby adopted and relevant costs will be calculated
as set forth therein.
IT IS FURTHER ORDERED that Citizens take the necessary actions to implement EAS as
authorized by this Order and those optional calling plans, as described above, and advise the
Commission within 14 days of the date of this Order of the proposed cut-over dates.
IT IS FURTHER ORDERED that Citizens file local service tariffs in conformance with the
rates set out in this Order.
THIS IS A FINAL ORDER. Any person interested in this Order (or in issues finally decided
by this Order) or in interlocutory Orders previously issued in this Case Nos. CTC- T -98-, GNR- T-
96-2 (Horseshoe Bend/Garden Valley/Sweet), GNR-96-8 (RigginslWhite BirdlNew Meadows),
and GNR-97-l0 (Blaine County) and USW-97-lICTC-97-l (Marsing) may petition for
reconsideration within twenty-one (21) days of the service date of this Order with regard to any
matter decided in this Order or in interlocutory Orders previously issued in CTC- T -98-, GNR- T -96-
2 (Horseshoe Bend/Garden Valley/Sweet), GNR- T -96-8 (RigginslWhite BirdlN ew Meadows), and
GNR-97-l0 (Blaine County) and USW-97-l/CTC-97-l (Marsing). Within seven (7) days
ORDER NO. 27789 23-
after any person has petitioned for reconsideration, any other person may cross-petition for
reconsideration. See Idaho Code 9 61-626.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this ~L day
of November 1998.
~~jj_4'~
ENNIS S. HANSEN, PRESIDENT
~~~~
RALPH NELSON, COMMISSIONER
ATTEST:
Y;;aa
~~
Myrna 1. W cffte
Commission Secretary
O:ctct983.
ORDER NO. 27789 24-